Here’s What You Need To Know
This month we witnessed another Facebook public affairs challenge in the form of its digital currency, Libra. The new cryptocurrency promised to “reinvent money” and “transform the global economy,” yet it seems the social network seriously underestimated the headwinds it would face, and this week company executives made their way to Capitol Hill for high-profile hearings.
Unlike some of the other challenges that have plagued the company, Facebook’s Libra woes are a crisis of its own making that could have been anticipated by conducting due diligence on political and reputational risks before the launch of the new initiative. Companies have been increasingly turning to competitive intelligence for public affairs because they know that gaining an information advantage helps them successfully navigate such political and reputational challenges before they occur. Here’s what companies can do to avoid Libra’s failure to launch and achieve their objectives:
- Begin By Assessing Political Risk: The moment Facebook announced Libra, it faced serious pushback from U.S. and European regulators and lawmakers. While the company appeared to be caught off-guard, it could have prepared for this scrutiny by assessing the political risk that Libra would face pre-launch from entities responsible for granting governmental permission, as well as the likely sources of outside advocacy and opposition on the regulatory stakes for the initiative. To do so properly requires that companies identify the full range of policymakers, stakeholders, and other key individuals and organizations that may be involved in the approval and execution process. Companies must also understand what these “influencers” have said or done in the past on similar projects in order to better predict and mitigate political risk. Assessing political risk before rolling out a new project can prevent wasted time, money, and embarrassment.
- Analyze The Range Of Stakeholders To Identify And Leverage Opportunities: Analyzing the stakeholders surrounding a project or initiative can become a force-multiplier for an organization, allowing it to focus on reaching out to constituencies so that its message can be heard by key decision makers. In Libra’s case, Facebook could have started by gaining the loyal support of prominent companies and proactively addressing their concerns before launch, so that their support for the project would remain steady in the face of regulatory scrutiny. Companies could also work to mobilize customers or users who support their products and could help shape public perception in support of a new initiative. However, being able to seize these opportunities in the first place requires first understanding where the interests of key stakeholders lie in relation to your company’s interests.
- Set Up A Monitoring Program To Keep Informed Of Trends And Developments: When crafting your launch strategy, standing up a monitoring program to keep informed of developments, changes in the state of play, and ongoing discussion about the new initiative can help your company anticipate and adapt to inevitable roadblocks. An effective monitoring program can identify public comments and actions that foreshadow challenges, so they can be addressed before major rollouts and before senior executives go before policymakers – whose approaches in hearings are often influenced by developments in the public arena, such as when Arizona Senator Kyrsten Sinema brought up a TechCrunch article on the risk of Libra being misused by “crooked developers.”
- Be Prepared To Respond To Criticism And Strengthen Your Position In The Public Arena: As the discussion and debate evolves around a new initiative, companies must be able to respond to events as they develop so they can share messaging, conduct outreach, and deploy other resources to build goodwill. They also need to be prepared to quickly respond to false, misleading, and negative attacks before their impacts are felt in the public arena. Otherwise, your company’s initiative can be at the full mercy of events outside your control, with little to no public affairs infrastructure capable of mitigating negative impacts once a crisis begins.
While Facebook executives overseeing Libra were able to address some policymaker concerns on Capitol Hill this week, the company also notably did not answer other critical questions. The path forward for Libra remains uncertain, but it provides an instructive lesson for companies launching initiatives requiring policymaker and regulatory approvals. To avoid political and reputational challenges that can complicate your launch strategy, strengthen your public affairs efforts with an information advantage that can be leveraged to achieve your objectives. We know some smart folks who can help.
Subscribe to Receive Insights
News You Can Use
DEMS’ MINIMUM WAGE DILEMMA
The Congressional Budget Office (CBO) recently released its analysis on the effects of increasing the federal minimum wage and the numbers are not pretty. The CBO found that by raising the minimum wage to $15, 1.3 million to 3.7 million jobs could be lost while 1.3 million workers would be pulled out of poverty. In other words, as many as three people could lose their jobs for each person helped by the increase.
Democrats have largely ignored the CBO’s findings, which is quite different from last year when they constantly highlighted the CBO’s view that a repeal of the Affordable Care Act would throw millions of people off health insurance. The CBO’s latest analysis further proves that raising the minimum wage is not a stimulus to economic growth and can be a serious job killer, although this fact will likely not change the rhetoric coming from politicians on the left, including several Democratic presidential hopefuls, looking to win support from their base.
GRUBHUB HAS THE MUNCHIES
You may be shocked to learn that Grubhub, the largest online ordering platform in the U.S., has gobbled up thousands of restaurant web addresses without their knowledge. For customers looking to place an order directly from a favorite restaurant to avoid third-party food delivery fees that can range from 3 to 15% per order, they are instead finding themselves on Grubhub-owned websites not owned or created by the restaurant that can charge a fee of up to 20%.
A new report from New Food Economy found that Grubhub has allegedly purchased more than 23,000 web domains posing as websites for businesses the delivery company works with. Although Grubhub has denied “cybersquatting,” this episode highlights that the food delivery space has become so lucrative to enable such tactics that provide even a slight competitive advantage. Going forward, restaurants, food delivery services, and customers should all have an interest in digging deeper – because things are not always as they seem.
“Traditional conglomerates have no future.” The grim words are from the head of Europe’s largest industrial conglomerate, Siemens CEO Joe Kaeser, who believes millions of people may lose their jobs as the traditional business model must be adapted to “survive a new technological age and chaotic geopolitics.”
In addition to a need for the world’s largest companies to narrow their focus to only producing the products or services in which they excel, the rising geopolitics of nationalism and protectionism mean that conglomerates can no longer assume they can casually build and operate facilities around the world. Therefore, multinational companies will have to make a greater effort to gain the societal and governmental permissions in the particular countries they wish to operate in, and to navigate the increased political and reputational risks that an aversion to “cosmopolitanism” may bring.
MONEY WELL SPENT?
Federal Communications Commission (FCC) Commissioner Brendan Carr is accusing liberal nonprofit organizations of using federal funds designed to give children in disadvantaged areas internet access to instead further their own political motives. Carr sent letters to three groups that he believes are scamming the federal program and “siphoning off millions of dollars” to political and advocacy groups. One of these groups, Voqal, has even promoted net neutrality (which was repealed by the FCC in 2017) and lobbied against FCC Chairman Ajit Pai.
This episode illustrates the far-too-common occurrence in which organizations are unknowingly funding efforts contrary to their interests. Whether nonprofit, for-profit, or even a government entity – and regardless of how noble or innocent the initial cause may seem – thorough vetting and a focus on “following the money” is crucial to ensuring that an organization’s money spent on key initiatives is money well spent.